Pre-budget expectations: Encourage outpatient cover

Irrespective of the policy changes that are made and implemented, irrespective of the schemes that are passed for the benefit of the masses, if healthcare expenditure is the cause for poverty, then we have a serious problem. Therefore, the focus of any step towards health insurance inclusion should aim to simplify adoption and use, as well as make utility affordable for everyone.

Getting straight to the point, out of pocket expenditure on outpatient healthcare needs is forcing families below the poverty line every year. Today, visits to the physicians, buying medicines, or visiting the diagnostic center for tests all, has to be paid out-of-pocket, the volume of which is far higher than in-patient care.

Apart from the infrastructure and technology required to implement an out-patient health insurance cover, the government also needs provide tax incentives to make it consumer-friendly for both types of customers; the providers of healthcare services and the policyholders. Today, when a policyholder purchases a health insurance policy and pays premium, it attracts a service tax, which is either borne by the customer, increasing the cost of the policy or absorbed the policy provider, artificially increasing the cost of the policy. In both cases, encouraging out of pocket cash transactions. Introducing a widespread health cover for outpatient services with tax incentives will encourage all service providers to move away from cash transactions and take all the transactions online where they are more regulated, accurate and transparent.

The INR 15,000 tax incentive provided for medical expenses to salaried individuals and the 80D limits for medical insurance can be enhanced or bifurcated to encourage not only electronic transactions but also, adoption of out-patient insurance. Consumers and providers of healthcare services need to be given incentives to go electronic as far as financial transactions are concerned and also encourage cashless insurance at the point of service. In today’s electronic world when the entire banking sector has gone electronic, enabling administrative mechanisms for compliance, any such tax incentives should not be such a challenge.

Encouraging electronic transfers comes with a host of obvious benefits. Providing tax incentives for healthcare providers who service consumers through electronic transactions and insurance will foster a better environment for adoption of outpatient insurance, thus, reducing the unplanned out of pocket expenses that an individual has to undergo in situations that require medical attention.

Adding to that, the availability of good structured electronic data will provide excellent tools to data scientists who can crack down on such data and produce reports and case studies that enable research into preventive care. There is enough data to prove that implementation of preventive measures will reduce the burden on tertiary healthcare as well as bring down the expenditure and necessity of resources associated with it. Undoubtedly, this will benefit the society tremendously.

To reiterate the need to encourage outpatient insurance; of all people who have inpatient insurance for hospitalization, a fraction ends up actually using it. While that component is important, as expenses on tertiary healthcare are very high, it is equally important to address the day-to-day medical expenses. It is very likely that incidence of usage of a similar cover for outpatient cover will be significantly more than for inpatient, if and when such covers are made widely available. Thus, we need to encourage financial products to enable usage of something that we all will end up using far more frequently than hospitalization.

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